Sramana Mitra: How long did it take you to get to a million dollars in revenue, and was that how you got to a million dollars in revenue?
Eric Shannon: The first 12-month period in which we did a million dollars in revenue was probably 75% Amazon.
Sramana Mitra: Got it. What was the second channel after Amazon?
Eric Shannon: The second channel was our own website based on the strength of Facebook.
Sramana Mitra: How did you put that together? Talk a little bit about the strategic nuances of that channel.
Eric Shannon: I thought the number two channel was going to be Google AdWords because my previous experience was entirely focused around Google. I didn’t even think this would work. This is early 2013. I was convinced about putting ads on Facebook to get people to like the page. We started getting people to like the page for very cheap. We were paying about two cents. At first, it was just fluff content like YouTube videos about dogs.
Sramana Mitra: Dog videos tend to do really well on Facebook.
Eric Shannon: But I didn’t think it was going to turn into dog bed sales. I just did it because I thought I should be doing it. Then the website started getting traffic whereas, previously, the website only got traffic from AdWords. It started getting visitors from Facebook.
Then we got more serious about Facebook advertising. I don’t remember any exact traffic number from year one, which would have been 2013. By the end of that year, we were probably 25% website sales and 75% Amazon. Over time, that number got skewed in favor of the website. The next part of Facebook is, as we started getting more beds in people’s houses, we started getting more and more customer photographs of their dogs on the beds.
Most of our social media content is not rocket science. We just take cute pictures of customers’ dogs on the bed along with the quotes they give us. We just post them on social media. The ones that get the most engagement, we just pay to boost. People really respond to that stuff. Amazon was the first pillar. Facebook was the second.
Sramana Mitra: How far did these two channels take you in terms of scale?
Eric Shannon: As of today, I’d attribute, at least, 80% of where we are now to those two channels.
Sramana Mitra: Are there any other channels that is worth discussing?
Eric Shannon: I’m counting Instagram as Facebook. Instagram seems to have a really good impact on us as well. Pinterest is okay for us. It used to be a lot better. When their ad platform rolled out, I thought it was going to be a major platform for us, but it didn’t take too long to get very crowded. There’s not as much inventory on Pinterest as there is on Facebook – not at the price levels we are looking to pay per click. But Pinterest is a good traffic channel. It performs well but there’s not just a ton of it at the price point that we need.
Sramana Mitra: That pretty much covers your customer acquisition channel or did I miss anything?
Eric Shannon: Those are the major ones.
Sramana Mitra: Switching gears a little bit, what was your financing strategy?
Eric Shannon: It was all cash.
Sramana Mitra: You didn’t do any kind of bank financing?
Eric Shannon: It was all organic, up until probably the first holiday season of 2014. That was the first time we borrowed money to stock up on inventory before the holiday season hit. We still do that every year. We start building up our inventory in September so that we don’t run out. The problem with Amazon is if you’re not in stock at their warehouses, your sales really plummet. We’re never actually out of stock. There’s still a merchant listing that’s still live.